In the competitive application process for residency, the speaker's firm only accepts 10 teams out of the 2,500 that apply per batch. The speaker emphasizes that they prioritize backing brilliant engineers early on and believe that having the best engineering team is the only defensible moat for a startup. They focus on founders who have a brilliance that attracts other talented engineers, which is reflected in their writing, communication style, code-writing skills, and the feel of their product.

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